EDITOR'S NOTE: This story has been updated to clarify Ron DeLuca's quote in the third paragraph.
Retail vacancies are down in Central Jersey, including right here in East Brunswick.
According to the R.J. Brunelli & Co. 23rd annual study of retail vacancy rates in the Central Jersey market, the retail vacancy rate along Central Jersey’s major shopping corridors—Route 1, Route 9, Route 18 and Route 35—fell to 9.1 percent in April from 10.5 percent a year ago, and 9.8 percent in 2010.
“I think the best way to sum it up is, it’s certainly better this year than the last three years,” said Ron DeLuca, senior vice president at Brunelli. “We still worry about the economic impacts of two key things: the situation in Europe and the price of gasoline. What happens in Europe could ulimately affect funds available for retail developers and owners, as well as commercial mortgage levels. With the price of gasoline hovering around $3.25 now vs. $4 or more a year ago, consumers are winding up with more disposable income. With that, they are hitting the roads, and spending on necessities, as well as things that a year ago may have been considered, ‘do not need now.’ ”
On Route 18, the “absorption” of four big box store locations took about 292,000 square feet off the market, dropping the vacancy rate to 12.9 percent from 22.1 percent in 2011, 13.5 percent in 2012 and 19 percent in 2009, according to the study. Though still a far cry from a 3 percent vacancy rate in 2003 and 7.3 percent in 2008, the numbers do show an improvement.
According to the study, much of the improvement along Route 18 has to do with the (which will eliminate three big box vacancies) and the opening of , which closed in 2010.
“The improved picture in central New Jersey over the past 12 months is largely due to positive activity on the big-box front, where full or partial absorptions of 10 spaces more than offset three fresh vacancies,” said Richard J. Brunelli, president of the firm. “Still, lingering vacancies in nearly 30 other big-box spaces along the corridors continued to keep the region’s vacancy rate elevated.”
Contributing to big box vacancies are bankruptcies or downsizings at such retailers as The Great Atlantic & Pacific Tea Co. Levitz, Linens ‘n Things, Circuit City, Office Depot, Value City, and Borders, said Brunelli.
Brunelli said that with the addition of Stop & Shop, and Walmart taking the place of Sam’s Club, the Route 18 Flea Market and the privately owned furniture store, there is 112,000 square feet of “big box” vacancies along Route 18. That accounts for 32.7 percent of the road’s empty space, down from 63.1 percent a year ago and includes the former Home Depot and Office Depot sites and smaller sites, including Sixth Ave. Electronics, which Mayor David Stahl said could be sold in the next week.
“This presents a new opportunity for people willing, in this case, to make a million dollar investment in East Brunswick and shows that East Brunswick is a great place to do business,” said Mayor Stahl.
Mayor Stahl also pointed to plans for a and the redevelopment of the corner of as positive signs. He also said the former Pollo Tropical probably would not be vacant for long.
“There are a number of places looking at that site and I don’t think it’s going to last too long,” he said.
Other new additions to the Route 18 corridor include the , home to Toys R Us and Babies R Us, Annie Sez, David’s Bridal, Pier 1 Import, Ulta, Chipotle, Cups Yogurt, Saruku, and more; and Harbor Freight Tools, which recently moved to the Miracle Mall and is open in space previously occupied by PetSmart.
Also coming to the Miracle Mall is a 10,000-square-foot Dollar Tree.
R.J. Brunelli’s 2012 survey found 343,361 square feet of vacancies on Route 18’s 2.65 million square feet of space, with availabilities in 26 of the 82 sites reviewed.
Overall, the study found 2.79 million square feet of vacancies in the 30.53 million square feet of space studied along State Highways 1, 9, 18 and 35 in Mercer, Middlesex and Monmouth counties, and a small section of Ocean County.
Of those included in the study, Route 18 posted the steepest drop in its vacancy factor, while Routes 1 and 35 also improved and Route 9 held even.
The study evaluated shopping centers and freestanding buildings exceeding 2,000 square feet—including restaurants, auto service facilities and vacant auto dealerships whose location and configuration makes them viable for retail use. Regional malls and centers under construction or major redevelopment are excluded.
“The mechanics involved were that a select group of real estate professionals were traveling—getting on the road, and traveling highways and stopping at each center, evaluating what the center looks like at the time, and where necessary, calling landlords to verify the size and number of vacancies,” said DeLuca.
While the report targeted larger vacancies, DeLuca did say that there is hope for vacancies in malls such as Movie City 5 at the southern end of the township and the one previously anchored by Office Depot in the north.
“Both suffer from one commonality, and that is, they are at the extreme ends of retail corridor,” he said. “Particularly troublesome for the one at the southern end is that it’s almost considered outside the trade area, and the center at the northern end suffers from access and visibility issues, and both centers could use a bit of a facelift.”
DeLuca said both centers are fixable, but improvements to their outside appearance, a carefully chosen mix of retailers and competitive rents would be key.
“Are they leasable? Yes they are, but they could see some improvements with a facelift and an awareness of the current leasing levels that are out on the market, because there are better spaces have been available along Route 18 for very handsome lease rates.”